Purchase Solution

# Gary & Co Ratio Analysis & Cost of Trade Credit

Not what you're looking for?

1. Given the following data for Gary and Co (Millions of Dollars)

Balance Sheet Dec 31 200X

Cash \$ 45
Accounts Payables \$ 45
Marketable Securities 33
Notes Payables 45
Receivables 66
Other Current liabilities 21
Inventory 159
Total Current liabilities \$111
Total Current Assets 303
Long term debt 24
Total liabilities \$135
Net Fixed Assets 147
Common Stock 114
Total Assets \$450
Retained Earnings 201
Total stockholders' equity 315
Total liabilities and equity 450

Income Statement Year 200X

Net sales \$795
Cost of goods sold 660
Gross profit 135
Selling expenses 73.5
Depreciation 12
EBIT 49.5
Interest expense 4.5
EBT 45
Taxes (40% 18
Net Income 27

Calculate the following ratios:

Ratio
Average
Current ratio
Times interest earned
DSO
Inventory Turnover
Sales/Total Assets
Profit margin on sales
Return on Total Assets
Return on Common Equity

Hint: Use Net Sales of \$795.
Days sales out is also called Days Sales Uncollected.

Show the formulas and numbers used in the calculations. Show calculations/formulas

2. Calculate the cost of trade credit given terms of 3/20 net 60
When performing this calculation why not use the number 100. Make sure to show the formula. Show calculations by hand as well.

##### Solution Summary

The solution computes various accounting ratio's for Gary & Co and also find out cost of trade credit in another example.

##### Solution Preview

See the attached sheet for calculations.

Current Ratio = Total Current Assets/Total Currrent ...

##### MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.